This Natural Gas Play Continues to Chug Along

Just seven short months ago, I made a bullish CAPScall on natural-gas engine designer Westport Innovations (NAS: WPRT) in my All-Star profile. Since then, the company's shares have absolutely obliterated the S&P 500 by over 85%.

With the company announcing earnings that once again failed to turn a profit, and missing analyst expectations, you'd think now would be the perfect time to close my call and sell my shares. But I actually think the exact opposite is true. Here's why.

Just the numbersSimply by looking at the baseline numbers, Westport's 2011 was a strong one, but there is plenty of room left for the company to run in 2012. Here are some of the key statistics investors need to know about Westport's momentum in helping the country convert to natural gas.

1-Year Growth

Percent of Total Revenue

Product Revenue

94%

82%

Part Revenue

19%

13%

Service Revenue

252%

5%

Total

83%

100%

Source: Westport Innovations.

Don't be fooled by the service revenue's big jump; it was starting from a very small base. Product revenue -- the money the company gets from natural gas engines that are sold -- has been, and will continue to be, the main driver of growth for the company.

But if the company's string of unprofitable quarters or sky-high valuation has you worried, consider this: Last year, the company shipped 5,739 units to customers. That was an impressive 46% increase from the previous year. But if we're to believe T. Boone Pickens' estimates, it's just the tip of the iceberg.

He believes that one day, the nation's 8.5 million 18-wheelers could be converted to natural gas. If even a third of that number comes to fruition, Westport -- as the only viable engineer of natural gas engines on the market today -- stands to increase its units shipped by a huge factor.

Partnerships are already in place with Cummins (NYS: CMI) for manufacturing, and a recent deal with Navistar (NYS: NAV) shows that the industry is beginning its shift. I'll still want to be on board when this movement really hits its stride, and that's why I'm reiterating my CAPScall.

If you'd like to know which natural gas company we think will benefit the most from this alternative fuel, check out our special free report. We'll fill you in on the best way to profit. Get your copy of the report today, absolutely free!